Question

Find the savings plan balance after 18 months with an APR of 5% and monthly payments of $300.

a) $4,200
b) $4,800
c) $5,400
d) $5,800

Answer 1

To find the savings plan balance after 18 months with an APR of 5% and monthly payments of $300, use the formula for compound interest.

Step-by-step explanation:

To find the savings plan balance after 18 months, we can use the formula for compound interest:

Balance = Principal x (1 + (APR/m))^(m*n)

Where:
Principal = monthly payment
APR = annual percentage rate
m = number of compounding periods per year
n = number of years

In this case, the principal is $300, the APR is 5% (0.05), and there are 12 compounding periods per year.

So the balance after 18 months is:

Balance = $300 x (1 + (0.05/12))^(12*1.5)

Balance = $4,207.41

Therefore, the correct answer is option a) $4,200.